Transcript Changes in the Global Trade Environment

Review of the NES – current
policy context
Subtitle:
Review of the NES
Presenter:
Ximena Gonzalez-Nunez & Andre Gouws
Date:
23 January 2013
3rd Reference Group Meeting
TIPS
Policy context
• Overarching priorities = poverty, inequality
and unemployment (NGP, NDP)
• Specific dti priorities = incl. trade promotion,
industrial development, investment
promotion, competitiveness etc (NES, NIPF,
TPSF)
• Sequencing translates into challenges…
• Specific elements bind the two……
• Policy coherence is key.
National Planning Commission
In June 2011 NPC identified a failure to
implement policies and an absence of broad
partnerships as the main reasons for slow
progress, and set out nine primary challenges
NPC Diagnostic Report
1. Too few people work
2. The quality of school education for black people is poor
3. Infrastructure is poorly located, inadequate and undermaintained
4. Spatial divides hobble inclusive development
5. The economy is unsustainably resource intensive
6. The public health system cannot meet demand or
sustain quality
7. Public services are uneven and often of poor quality
8. Corruption levels are high
9. South Africa remains a divided society.
?
NPC – National Development Plan
In order to achieve NDP objectives, three
priorities stand out:
• Raising employment through faster economic
growth
• Improving the quality of education, skills
development and innovation
• Building the capability of the state to play a
developmental, transformative role.
Savings
Investment
Export
growth
NDP – strong focus on job creation
The NDP proposes to create 11 million jobs by 2030 by:
• Realising an environment for sustainable employment
and inclusive economic growth
• Promoting employment in labour-absorbing industries
• Raising exports and competitiveness
• Strengthening government’s capacity to give leadership
to economic development
• Mobilising all sectors of society around a national
vision.
NDP – job creation: how?
Its proposals include:
• Diversifying South Africa’s trade towards
emerging economies
• Revitalising logistics and transport links
• Promoting manufacturing in areas of competitive
advantage
• Packaging regional tourism offerings
• Lowering the costs of living and of doing business
NDP
The key ingredients for success are:
• The active efforts of all South Africans
• Growth, investment and employment
• Rising standards of education and a healthy
population
• An effective and capable government
• Collaboration between the private and public
sectors
• Leadership from all sectors of society.
NPC NDP Vision 2030
NGP: exports need to grow by 5% therefore manufactures
will need to grow by 7-8%
Quadrants of
growth – need
to focus on
labour
intensive, which
needs to grow
at 9-10% at
least
NDP + exports: Changing global
context
• Patterns of trade and investment are changing
with BRIC leading the pack
• SA should be adapting its strategies
accordingly
• NDP highlights the importance of coordinating
the suite of policies related to trade, industrial
development and investment to take
advantage of these arising opportunities
NDP + exports: Changing global
context
• Policy focus on developing areas of competitive
advantage, where there are revealed strengths.
• Learning by doing will be important to learn from
success and failure and to withdraw from sectors
where mistakes have been made.
• South African companies will be encouraged to
participate in regional infrastructure projects, and
also in integrating regional supply chains to
promote industrialisation.
NGP: strategic export promotion
• Challenge for SA around diversification up the
value-chain
• Re-industrialisation leveraging off opportunities
identified in growth path is critical.
• This goes beyond identifying sectors + product
niches; but also markets.
• SA businesses need to do more to find
opportunities in fast-growing BIC economies.
(take strategic adv of eg eg comprehensive
strategic partnership with China)
NGP: strategic export promotion
• Promoting regional development
• Measures to enhance domestic + regional
demand as well as extending export
promotion strategically to the rapidly growing
economies of the global South.
• These measures need a competitive rand to
succeed.
• Importance of developmental trade policies
National Industrial Policy
Framework: NIPF
• Government’s approach to industrialisation, policy
development & implementation.
• Moves to :
– increase production of value added products and services,
– intensification of SA industrialisation process moving
towards a knowledge economy,
– the promotion of a labour-absorbing industrialisation path
focusing on incorporating previously disadvantaged and
marginalised communities whilst building on the countries
productive capabilities.
– Contributing to industrial development on the African
continent, with a strong emphasis on building its
productive capacity.
NIPF – 13 strategic programmes
SP1: Sector Strategies
SP2: Industrial Financing
SP3: Trade Policy
SP4: Skills and Education for Industrialisation
SP5: Competition Policy and Regulation
SP6: Leveraging Public Expenditure
SP7: Industrial Upgrading
SP8: Innovation and Technology
SP9: Spatial and Industrial Infrastructure
SP10: Finance and Services to Small Enterprises
SP11: Leveraging Empowerment for Growth and Employment
SP12: Regional and African Industrial and Trade Framework
SP13: Coordination, Capacity and Organisation
Industrial Policy Action Plan (IPAP)
IPAP identifies specific priority sectors and
actions eg:
• Leveraging public investment to realise
potential of metals fabrication, capital
equipment + transport sectors
• Agro processing
• Plastics, pharmaceuticals + chemicals
• Etc….
NIPF/IPAP plus
Linkages between NIPF, IPAP and export,
investment strategies is weak
Eg linkages with export councils, but there are
gaps that we are addressing through our surveys
Trade Policy
• Trade policy is an instrument of industrial policy (TPSF)
• Trade policy now to be informed much more closely by sector
strategies, at both the negotiating and administrative levels.
• A particular focus will be on reducing input costs for labourintensive and value-adding manufacturing sectors.
• Export and foreign direct investment promotion will be more
targeted.
• Tariff setting is determined sectorally in a strategic manner;
ITAC look at criteria, eg ERP, but also need to look at antiexport bias (this will be unpacked in the statistical analysis)
Trade Policy: multilateral
Multilateral relations – SA’s participation in the WTO is
articulated by its representative, Faizel Ismael as including
five negotiating approaches:
• The need to take into account the interests of ‘both’
South Africa and others, especially that of the African
Continent;
• The capacity to listen to different sides of an argument;
• Consultations with constituencies at home;
• Balancing principles with capacity to implement; and
• Adhering to ‘principles’ whilst being pragmatic on
‘strategy’
Trade Policy: regional/bilateral/S-S
Regional/bilateral relations – SACU/SADC/Tri-partite FTA
and?
• Development of common policies
• Commitment to regional integration and increasing
intra-regional trade
• Opportunities to link into global value chain through
regional approach to increased competitiveness
• Focus on tapping into non-traditional export markets
eg BIC, but still looking after traditional markets eg
study to inform lobbying of extension of AGOA
• Issues of anti-export bias?
National Export Strategy
Drafted in 2000, but never formally adopted
Current process is to review this, including
assessing best practice
Current constraints to trade
promotion
Fiscal policy - NT non-interventionist stance has
meant limited incentives and tax reductions for
exporters
Monetary policy – independent SARB with focus
on internal stability and not external stability
therefore inflation targeting. A more
competitive and stable exchange rate would
have a positive effect on exports and investment
Minerals beneficiation strategy
• In line with objective to diversify up the value chain,
mineral beneficiation strategy approved by cabinet in
2011
• To unlock competitive advantage, challenges and
benefits need to be considered:
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Access to raw material for local beneficiation
Lack of infrastructure
Research and development
Skills sought for expediting local beneficiation
Access to international markets for beneficiated products
• Key commodities have been clustered into specific
value chains
Incentives offered by the dti
• Range of financial support for various
economic activities, including manufacturing,
business competitiveness, export
development and market access, as well as
foreign direct investment.
• These are part of the focus of the survey we
are undertaking
Advanced manufacturing technology
strategy
• Priority sectors identified
• Stimulates process of technological upgrading,
facilitation of technological resource flow via new
knowledge networks; building a creative, innovative
environment through supply of skilled manpower,
technology infrastructure and funds.
• Identifies specific products eg automotives (&
transport), metals (& minerals) + technology focus
areas eg production technologies, logistics etc
• Strong focus on aligning spheres of government and
issues such as strategic regional approaches
Draft white paper on SA’s foreign
policy
• Direction that South Africa’s foreign policy is taking is
critical to the NES
• Draft white paper on SA’s foreign policy in 2011 with
strong focus on economic diplomacy
• Emphasises new global landscape:
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New global markets;
Redirection in trade and investment flows;
Globalizing labour market;
Realignment of economic alliances;
Increase in social divisions;
New consumption patterns and
New production networks.
Draft white paper on SA’s foreign
policy
• South African missions abroad are key and can
assist South African business abroad through:
– Providing sufficient intelligence on market
conditions,
– Giving advice on interpreting market intelligence,
– Providing information on local cultural nuances
that would assist South African business to better
access those markets
– Advocacy, and
– Market access support.
Draft white paper on SA’s foreign
policy
• South African Development Partnership
Agency (SADPA) will facilitate and manage
development assistance in support of South
Africa’s foreign policy objectives
• Would be useful to assess how grants given to
other countries could be tied to products that
SA can export especially around built
environment services eg architects etc and
capital equipment
Special Economic Zones
• Busy with data analysis – looks like high value
added in-land and heavy industry closer to the
coast
Capital equipment
• Updated Sector Development Strategy (2011)
• Sector is complex & linked to other industries such as
metals, engineering and the components
manufacturing sectors.
• Demand dominated by the mining sector as well as
state entities
• Earthmoving equipment and equipment utilized in the
electricity generation and distribution process, road
upgrades and maintenance and water services
provision.
• Key focus is around leveraging large scale public
investment to industrialise up the value chain
Capital equipment
• Leverage infrastructure projects to unlock
economic opportunities and expand investment
and jobs in the economy (around manufacturing
and maintenance)
• Infrastructure programme to promote broader
industrialisation of the economy,
• Infrastructure aimed at integrating African
economies to create larger markets and promote
deeper intra-regional trade and investment.
Capital equipment
• New Growth Path (NGP) : Infrastructure
development identified as a critical driver of jobs
and manufacturing demand across the economy
• Presidential Infrastructure Coordinating
Commission (PICC): Infrastructure Plan with 17
Strategic Integrated Projects (SIPs), covering more
than 150 specific infrastructure interventions.
– Includes rail, road and port; dams, irrigation systems and
sanitation; new energy generation plants, transmission and
distribution of electricity to households; communication and
broadband infrastructure; social infrastructure (hospitals,
schools and universities) & regional infrastructure.
Agriculture
• In 2008 the Department of Agriculture Forestry and Fishing
(DAFF) drafted an “Agricultural Trade Development Strategy
for South Africa”. Its purposes are:
– To monitor and evaluate global and local trends in trade and to
provide an informed strategic direction that can form part of
government and industry’s plans of action, to be reviewed and
monitored regularly to measure progress.
– To provide a common understanding and directives within
government and its institutions and the agricultural industry
with regard to the application of trade policy instruments: trade
negotiations, tariff policy, trade and business support services
and regulatory support.
– To provide broad based direction on how trade in agricultural
and food products can contribute to the shared growth
objectives of ASGI-SA and employment creation.
Agriculture
• Three main objectives have been identified:
– Improving market access for new export
opportunities through agricultural trade
negotiations.
– Long term sustainability of the production of
tradable products.
– Grow the exporter base.
Creative industries
In the Department of Arts and Culture’s Medium-term
Strategic Framework, Programme 2: Arts and Culture in
Society contains the following points:
• Promotion of arts and culture in South Africa and
mainstreaming its role social development.
• Promotion of social enrichment, social cohesion and nation
building through arts, culture and heritage.
• Promotion of social inclusion of previously marginalised
groups in arts, culture and heritage.
• Socio-economic empowerment of women, youth and
special groups through skills, participation and
opportunities in the arts, culture and heritage sector.
There is no specific reference to exports
Regional Industrial
Development Strategy (RIDS)
RIDS is the mechanism designated by the
national government to respond to spatial
differentiations in the economic welfare levels of
the country. It not only aims to support and
capitalise on growing and leading regions, but to
assist and support regions indicating economic
development delays and restraints.
Competition Act
• Competition Commission is empowered to investigate,
control and evaluate restrictive business practices,
abuse of dominant positions and mergers in order to
achieve equity and efficiency in the South African
• In terms of Act exporters cannot collude, though
exemptions may be applied for in specific
circumstances
• In cases where the NES may require export consortia to
be formed TISA may need to apply for block
exemptions (NGP – also made recommendations that
restrictive practices should get relaxed when exporting)
Wrap up
• Plethora of policies and strategies to be taken
into account in reviewing the NES
• Some key overarching policy objectives clearly
articulated in NDP and other core documents
• Practical aspects will also be critical to ensure
document is useful – surveys, provincial visits
key in this regard
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